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Blog post of the month: “We are looking at gold and calling it rock”: Supporting communities to calculate the replacement costs of their communal lands and natural resources

Rachael Knight's picture

Boundary tree planting committeeEach month People, Spaces, Deliberation shares the blog post that generated the most interest and discussion. In May 2015, the featured blog post is " “We are looking at gold and calling it rock”: Supporting communities to calculate the replacement costs of their communal lands and natural resources".

Across Africa, Asia and Latin America, investors are increasingly approaching rural communities seeking land for logging, mining, and agribusiness ventures. In response, international and national advocacy organizations are stepping forward to provide support to communities in negotiations with investors, often with a focus on ensuring adherence to international laws such as the right to free, prior, informed consent (FPIC).[1] Yet even in situations when investors have followed FPIC principles and conducted a formal “consultation” to seek community consent to their proposed business venture, these consultations are generally conducted in a context of significant power and information asymmetries. Communities are frequently pressured by high-level government officials to consent to deals that they do not fully understand or desire. Community members may not be aware of the rental value of their land on the national market, the expected annual profits the investor will gain from the venture, the overall net worth of the investors’ company, and other financial information critical to negotiating a fair contractual agreement, including the value they themselves are deriving from their common lands. As a result, they have difficulty calculating an appropriate rental cost that leaves them in an equal or better position than before the investment.

“We are looking at gold and calling it rock”: Supporting communities to calculate the replacement costs of their communal lands and natural resources

Rachael Knight's picture
Members of the Sihan Clan planting a boundary tree, Rivercess County, Liberia

Communal land, forests, and water sources are essential to the survival of many communities around the world. However, investors seeking resources may negotiate contracts that do not include rental payments. To address this imbalance, Namati and its partners designed an activity to empower communities to grasp the inherent value of their common areas to them, so that they can reject inequitable contract offers and negotiate contracts that will lead to community prosperity.

Across Africa, Asia and Latin America, investors are increasingly approaching rural communities seeking land for logging, mining, and agribusiness ventures. In response, international and national advocacy organizations are stepping forward to provide support to communities in negotiations with investors, often with a focus on ensuring adherence to international laws such as the right to free, prior, informed consent (FPIC).[1] Yet even in situations when investors have followed FPIC principles and conducted a formal “consultation” to seek community consent to their proposed business venture, these consultations are generally conducted in a context of significant power and information asymmetries. Communities are frequently pressured by high-level government officials to consent to deals that they do not fully understand or desire. Community members may not be aware of the rental value of their land on the national market, the expected annual profits the investor will gain from the venture, the overall net worth of the investors’ company, and other financial information critical to negotiating a fair contractual agreement, including the value they themselves are deriving from their common lands. As a result, they have difficulty calculating an appropriate rental cost that leaves them in an equal or better position than before the investment.

How Fair is “Fair Compensation” Under India’s New Land Acquisition Act?

I.U.B Reddy's picture

The much anticipated Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (“the Act”) has just come into force in India on January 1st, 2014. Unlike the replaced 1894 legislation, this act addresses the rehabilitation and resettlement of those who depend on land, in addition to land owners. As emphasized in its title the new act places a greater emphasis on transparent processes at various stages: for example, through its mandatory social impact assessments, public hearings, and dispute resolution mechanisms.  
 
The other key emphasis in the act’s title refers to a new compensatory mechanism. The new act now provides for up to two times market value, against one time in the previous act and this figure is then doubled by applying a one hundred percent “solatium” against 30% in the previous act (additional compensation). Though people get more compensation under new  act, an increase in multiplier does not address the fundamental question of determining “market value”  in a country where registered values under-represent land purchase price to evade high stamp duties.  The challenge is exacerbated in rural areas where there are fewer land transfers, and therefore fewer registered sales deeds to use as reference points. In such situations, a valuation that is perceived to be more “fair” can be found only through consultations and dialogue, as demonstrated by two case studies from World Bank financed projects in India: